All countries in Latin America and the Caribbean face great challenges regarding stability and security. Corruption, drug trafficking, and money laundering, and a perception of insecurity fueled by crimes such as homicide, theft, or extortion, progressively undermine citizens’ trust in their institutions, and erode political and legal stability with serious economic repercussions.
As they face such reality, many countries in the region have made an international commitment to work to achieve the Sustainable Development Goals (SDGs). SDG 16 focuses on achieving just, peaceful, and inclusive societies by reducing violence, fighting corruption, strengthening institutions, and promoting transparency and citizen participation. All these goals require a strong commitment from national authorities in the fight against crime, in particular against corruption and all forms of global organized crime.
The United Nations Convention against Corruption (UNCAC) is a powerful international tool to which almost all Latin American countries are committed, including to implement effective mechanisms to recover proceeds of corruption. Commitments adopted by States Parties and signatories to the Convention are precisely and clearly aligned with the 2030 Agenda for Sustainable Development, specifically with SDG 16.
Latin America and the Caribbean’s experience in fighting corruption, financial and organized crime has yielded a great number of lessons. The most important being the need to obliterate economic incentives for financial and organized crime. Many Latin American countries have understood that while prosecuting criminals is essential to improve national security and stability, it is nonetheless insufficient. As long as the economic incentives remain, crime as a social phenomenon will not only continue to exist, but it will also continue to grow. For this reason, forfeiting proceeds of crime is crucial to a strategy aimed at reducing violence, fighting corruption, strengthening institutions and, in general, achieving more just, peaceful, and inclusive societies.
Non-conviction based asset forfeiture (NCB) is the authorities’ ability to forfeit proceeds of crime without a criminal conviction. Latin America has developed its very own NCB legal theory and the mechanism is called “extinción de dominio”. When assets are the proceeds of a criminal offence, or when they were used to commit a crime, a judicial authority can transfer its ownership to the State without compensating the legal owner, as it is considered that the legal act that created the original property title was void. It is a powerful criminal policy instrument specifically designed to fight all forms of organized crime. Countries in which it has been enforced attest to its effectiveness in disrupting the economic structures of criminal organizations and recovering resources that otherwise would have been lost to corruption. For this reason, the Stolen Asset Recovery Initiative (StAR) has provided continuous support to countries in the region in adopting and implementing NCB legislation.
The global standard setter on anti-money laundering, Financial Action Task Force (FATF), requires countries to adopt measures to allow competent authorities to freeze, seize and confiscate illicit assets taking into account the rights of bona fide third parties. Similarly, the UNCAC dedicates an entire chapter (Chapter VI) to asset recovery. The commitments under UNCAC largely coincide with FATF recommendations, creating an obligation under international law. These international standards, recommendations, and best practices for the identification, tracing, freezing, seizing and confiscation of proceeds of crime are gathered in the Latin America and the Caribbean’s model NCB law, which has become the region’s main reference text on the matter.
Implementing NCB legislation represents an important opportunity for all Latin American and Caribbean countries. Adopting this framework would significantly increase the enforcement of international recommendations, standards, and best practices in the fight against corruption, money laundering, the financing of terrorism and proliferation of weapons of mass destruction (WMDs). Recognizing this legislation’s full potential would, in turn, bring countries a step closer to becoming fully cooperating jurisdictions in the fight against transnational organized crime, as it would also contribute to strengthening the capacity of judicial authorities to combat highly destabilizing phenomena such as corruption and drug trafficking. As a result, resources that were intended to support social programs and eradicate poverty can be applied according to their original purpose.
In Latin America and the Caribbean, countries implementing NCB have usually undergone long legislative processes characterized by intense debate, where the main controversy revolves around the mechanism’s characteristics of atemporality, imprescriptibility, and retrospectivity. Its scope of application has also been the subject of debate, when determining which crimes can trigger NCB.
However, the expansion of the adoption of NCB in the region has been accompanied by an increment in procedural guarantees, particularly regarding due process. The principle of proportionality is key to ensuring that the application of NCB is commensurate to the offence. Concepts such as good faith are strongly rooted, serving as legal limitations to asset forfeiture in the protection of bona fide third parties. These robust procedural guarantees have contributed to preserving legal certainty on economic transactions.
That said, NCB is not a novel piece of legislation; it has had twenty-six years of evolution and is currently firmly entrenched in countries such as Colombia, Peru, El Salvador, Honduras, Guatemala and Bolivia. Recently, larger countries such as Mexico and Argentina have adopted it, and Ecuador enforced it in 2021. Just this week the Dominican Republic joined this list. NCB has yielded great benefits in all countries already implementing this measure, such as the quick recovery of proceeds of corruption, or disrupting dangerous criminal networks. These benefits have helped dispel the distrust with which this legislation was originally met.
Countries currently discussing NCB legislation have the enormous advantage of having many international references available. Considering the vast knowledge developed and experience acquired by countries that have adopted NCB in the past three decades, legislative authorities and policy makers currently considering such reforms can draw inspiration from those examples and build on their experience to enact the most modern and complete legislation possible. That decision, however, requires a great vision from national authorities, and the StAR Initiative is ready to walk this road with them.